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Understanding the Monthly Minimum

The merchant account monthly minimum is one of those terms that’s pretty much what it sounds like: the minimum dollar amount a merchant account provider charges a client for credit card processing within a monthly period. Whether a merchant hits the mark depends totally on their processing volume for any given month.

The monthly minimum is stated in the merchant processing agreement (MPA), the contract you enter into with your merchant account provider. Generally speaking, businesses that process higher volumes of payment card transactions don’t have to worry about the monthly minimum because they are likely to surpass it each month.

Lower-volume merchants, or merchants whose processing volume is sporadic or seasonal, are more likely to be impacted by the monthly minimum. However, they may be able to negotiate with their merchant account provider for a lower minimum or a waiver. That’s because unlike other components of your MPA (like interchange, which is set by the credit card associations), the provider sets and controls the monthly minimum amount.

Here’s a very simplified example of how the monthly minimum might play out for Merchant Bob, whose merchant account has a discount rate of 1.7 percent, a transaction fee of 30 cents and a monthly minimum of $25. This month, Bob processes a gross amount of $1200 in Visa® and MasterCard® sales in 15 transactions. The fees on his account would be $20.40 (1.7% X $1200), plus an additional $4.50 (.30 X 15) in transaction fees, for a total of $24.90. For this particular month, Bob missed his monthly minimum of $25 by 10 cents, so he will be charged the monthly minimum on his monthly statement.

If Bob’s processing volume goes up next month, it’s likely that he will meet or exceed his monthly minimum amount and there will be no additional charge.

Not all merchant account fees are included in the monthly minimum amount. Two examples of this are the monthly merchant account statement fee and the customer service fee. To calculate your base merchant account costs for any given month, add your monthly minimum fee to any fees that your merchant account provider charges separately. In Bob’s case, if his statement fee is $10 and his customer service fee is $5, that’s $15 in addition to his monthly minimum of $25, for a total of $40 each month.

At TransFirst®, we believe that it’s important for all of our clients to understand the merchant processing agreement that they have with us. That’s why our trained representatives take the time to go over all your merchant account requirements carefully before suggesting a package of products and services that will best suit your business. We’ll also answer all your questions regarding your merchant account, including rates and fees.

While you’re talking to us, be sure to ask about our 30-day risk-free trial and free 24/7 customer support. At TransFirst, we specialize in credit card processing for small businesses like yours. Why not find out how our expertise can help you grow your business and your bottom line?

Beth Longware Duff is a professional editor and award-winning writer whose work on a wide variety of topics has been published in print and electronic media. She currently writes on a range of subjects related to electronic payment processing and small business for TransFirst.